Do High Net Worth Families Really Use Infinite Banking?
Cash flow banking or “Infinite Banking” are commonly used terms which refer to the use of high cash Watch the video below to get the inside scoop.
These plans are often marketed as a tool that is used by all high net worth families and investors to preserve and pass on their wealth in a tax efficient manner.
But is that really true? I’ve heard numerous salespeople present that to me as fact, but I’ve never had an objective third party weigh in on whether high net worth or ultra-high net worth families really use infinite banking in their strategies.
Richard recently appeared on our podcast The Passive Wealth Strategy Show and weighed in on whether ultra high net worth investors really do use Infinite Banking.
The answer is: No, not typically, but with caveats.
He sees that families and investors with net worths of $3 to $15 million probably stand to gain the most benefit and use these plans most frequently. Above that, people with net worths over $100 million have access to many other options for their legacy.
However, he adds that this does not mean the plans do not have value. If more people knew about the strategy and understood how it works, high cash value life insurance may get more usage.
Observations on Infinite Banking
Over the years I’ve interviewed a few dozen Infinite Banking proponents and salespeople. I’ve also had conversations with several clients and high net worth investors who do use this high cash value life insurance strategy.
Personally, I do not yet use one of these plans. I do not sell them, nor do I have any plans to do so in the future. My only goal in this discussion is to get to the unvarnished truth and share my findings with you.
One-on-one conversations with individuals who use these plans are the most illuminating and instructive
My Conclusions on Infinite Banking
- Infinite Banking can be useful as part of a larger wealth generation strategy
- The commissions on sales of these policies are extremely high, which has led to unscrupulous sales practices by some people in the industry.
- There are numerous pitfalls which can come up in the plans are not correctly designed to meet an investor’s goals.
Richard C. Wilson is the CEO & Founder of the Family Office Club, the #1 largest association of over 3,000 registered ultra-wealthy families and their family offices. He is is a third-generation Eagle Scout, husband, and father of 3 living in Scottsdale, Arizona.
Richard has helped create and formalize 150+ family offices and counts a shark from Shark Tank, several billionaires, many REITs, and 700+ investors with an average net worth of $28M as clients.
Richard works with clients through InvestorClub.com and Doctor’s Investor Club where he helps them access top screened direct investments. Richard’s 22-person team operates multiple media platforms including Dentist Investors, LLC, InvestorResidences.com, Billionaires.com, and CommercialRealEstate.com.
Richard has written three #1 bestseller family office books on Single Family Offices, How to Start a Family Office, and Centimillionaire Strategies ($100M+ net worth families). Richard has an undergraduate degree in business, an M.B.A., and has studied post-master’s psychology through Harvard University’s ALM Division.
